Judge: City Can't Use Library's Tax For Redevelopment

The Orange County Library District has won the right to keep all its special taxes for library use rather than turn over a portion to Orlando for downtown redevelopment projects such as streetscape.

In a ruling made available Friday, Orange Circuit Judge William Gridley agreed with library backers that money from the special tax should be spent for library purposes.

''Libraries ought not to be contributing to the funds for brick and mortar,'' library attorney Gordon ''Stumpy'' Harris told the judge at a hearing June 6.

The money -- which now amounts to $218,000 -- has been in dispute since late 1982, when Orlando established a new taxing scheme for downtown called tax-increment financing.

Under that setup, the tax base for property within 549 acres of downtown was frozen at 1982 levels. The city, Orange County and Orlando Downtown Development Board charged taxes on the property value as it stood in 1982.

Any additional money due those governments from taxes on new construction or higher assessments in that area was given to the city for special downtown redevelopment purposes, such as street beautification and low-income housing. The library district has refused to turn over the money, contending that state law exempts special library districts from giving up their taxes for downtown redevelopment.

''I think it's a victory for the library taxpayers,'' said lawyer Tom Wilkes, who worked with Harris.

''The common misconception is that only downtown property owners pay the tax increment. In fact, the tax increment would have had to been paid by every taxpayer in the district,'' Wilkes said. Taxes on all property owners would have had to be increased to make up for the lost income.

All Orange County landowners pay a tax of about 61 cents for each $1,000 of assessed property to support the library, except in Winter Park and Maitland, where the cities operate their own libraries.

''The Legislature made a decision that minds are more important than trees, or bricks or mortar,'' said Harris, urging Gridley to allow the library to keep its money.

Assistant City Attorney Robert Guthrie argued, however, that a Florida Supreme Court case in February concerning Daytona Beach reaffirmed the right of cities to collect taxes from special districts for redevelopment, since that also serves a public purpose.

Guthrie also noted when the Legislature exempted library districts from the taxes, it added an exception to that law: Cities are entitled to library tax money in cases where they already have obtained court approval to sell bonds backed by tax-increment financing.

Orlando won court backing to issue its bonds in January 1984. When that change was made by state Rep. Tom Drage, R-Orlando, it was the only Florida city in that situation.

Harris said that wasn't fair.

''Why in the world should our library be the only library in the state of Florida'' required to pay for downtown redevelopment, he said.

Harris also argued that Orlando shouldn't qualify for that exemption since the city isn't relying on library money to pay off the bonds.

At the time the city officials were preparing to issue bonds, they knew the library disagreed over the requirement to turn over the money. To avoid disputes that would delay the bond issue, the city fashioned the deals so that the bonds could be repaid even if the library money was never turned over. Orlando has used tax increment financing to issue bonds worth $17 million.

Gridley's ruling does not give details on why he decided in the library's favor.